### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-10-00094- CV

City of Galveston and Texas Com m ission on En vironm ental Quali ty, Appellants

v. F lagshi p Hotel, Ltd., App ellee

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 98TH JUDICI AL DISTRICT NO. D-1 -GN-0 9-0 0065 1, H ONO RAB LE RHO NDA HURLEY , JUDGE P RESIDING

O P I N I O N

This case involves an administrative deter mination by appellant Texas Commi ssion

on Environmental Quality (TCEQ) that it has no jurisdiction over a dispute bet we en appellee Flag ship Hotel, L td. and appellant City of Galveston. Flag ship soug ht a deter mination from TCEQ that the ag ency had no jurisdic t i o n o v er the dispute, and TCEQ issued a final order in the case to that eff ect. Flag ship the n filed suit in district c ourt appea ling and challeng ing the result that it ha d
reque sted. We conclude that Flag ship is not ag g rieve d by TCEQ’s final order and, there fore , is not entitled to judicial revie w under section 2001.171 of the Administrative Procedur e Act (APA). We dismiss Flag ship’s suit for lack of subject-matter

jurisdiction.

Factual an d Procedural Background

At all times rele vant to this laws u i t , Fl agship was the lessee and opera tor of the Flag ship Hotel—locate d on a pier in Galveston, Texas—and the C ity was the lessor and owner .During t h e 1 9 90s, a dispute arose betwee n the City and Flag ship reg arding amounts owed for

municipal water

service provided to the hotel. Fl ag ship filed suit in Galveston County ag ainst the City and in 2001 o b t ai n ed

a temporar

y restra ining order enjoining the City from discontinuing water service to the hotel. The C i t y appea led the temporar y injunction. I n Marc h 2002, the First Court of Appea ls hel d t h at t h e trial court lack ed j urisdiction to issue the injunction beca use the Texas Natura l Resource Conservation Commi ssion (TNRCC)—the prede cessor age n cy to TCEQ—had exclusive appellate jurisdiction over the City ’s order , based on Tex as Water Code section 13.042(d). See City of Galveston v. Flagship Hotel, Ltd. , 73 S.W .3d 422, 426-27 (Tex. App.—Houston [1st Dist.] 2002, no pet.); see also Tex. Water Code Ann. § 13.042(d) (West 2008) (“Th e commission shall have exclusive appellate jurisdic t i o n to revie w order s or ordinanc es of those municipalities

as provided in this chapte r.”)

. Four day s later, Flag ship reque sted an emer g ency order from TNRCC with r espec t to the dispute. TNRCC did not issue any ruling at that time, but a TNRCC employ ee replied by letter that the ag ency “has no jurisdiction to issue an emer g ency order in this matter.” Nine day s later, the Galveston County district court enter ed a final judgme nt based on both parties’
mot ions for summary judgme nt on the rema ining issues. Both parties appea led the judgme nt. I n addition to addre ssing other portions of the distri ct co u rt ’s judgme nt, the Texarkana Court of Appea ls found the First Court of Appea ls’ rea soning in the previous appea l “per suasive,” and held that Flag ship had to exhaust it s administrative reme dies throug h TCEQ. See Flagship Hotel, L td. v. City of Galveston , 117 S.W .3d 552, 562-63 (Te x . App.—Texarkana 2003, pet. denied)

. I n Ap ril 2007, Flag ship filed with TCEQ an “Amende d Petition for Review of the City of Ga l veston with Respect to the City of Galveston’s Fa ilure to Refund Sums Paid to Avoid
2Disconnec tion of Water Service .” Flag ship reque sted that TCEQ rule on its jurisdiction to hear the

dispute betwee n the City and Flag ship—the same subject matter o v er wh i ch the two courts of
appea ls had held TCEQ has e x clusive appe llate jurisdiction. I n the petition, Flag ship pr ay ed that:
[TC EQ] set this matter for hear ing on the issue of jurisdiction and issue a final ruling that [TC EQ] has no jurisdiction over this dispute and [Flag ship] is fre e to pursue its claims ag ainst the City

of Ga lveston in a state cour t.

Alterna tely , Flag ship pray ed that:

I n the unlikely event that [TC EQ] holds that it has jurisdiction over t h i s m at ter, [Flag ship] reque sts that [TC EQ] re v i ew t h e City of Galveston’s failure to ref und cer tain sums [Flag ship] paid to a void disc onnection of its water service and, afte r a hear ing on the same, order th e C i t y o f Galveston to ref und the amount [Flag ship] paid to avoid disconnec tion of its water service , and for such other and further relief to which [Flag ship] may

be justly entitled.
TCEQ ref err ed the case to the State Offic e of Administrative Hea ring s (SOAH). The SOAH administrative law judge , in turn, cer tified to TCEQ the question of wh et h er T C EQ has exclusive appellate jurisdiction to revie w order s of a g overning municipality pursuant to water code section 13.042(d). TCEQ answe re d t he cer tified question in the neg ative. Acc ording to TCEQ, the City of Galveston is a municipally owned utilit y . See Tex. Water Code Ann. § 13.002(13) (West 2008) . The wa

ter c ode states that TCEQ doe s not ha ve jurisdiction to reg ulate or supervise the rate s or service of a utilit y owned and opera ted by a municipality within its corpor ate limit s. See
i d

. § 13.042(f) ; see also id. § 13.043(a) (West 2008) (“A ny party to a rate proce eding b ef o re t h e g overning body of a municipality may appea l the decision of the g overning body to the commission. This subsection does not apply to a municipally owned utilit y .”). Ba sed on TCE Q’ s answe r, the

3administrative law judg e dis missed the case from SOAH’s docket. On Fe bruar y 23, 2009, TCEQ issued a fina l order dismissing F lag ship’s petition for lack of jurisdiction. Upon obtainin g a final ruling that TCEQ has no jurisdiction over the dispute, howeve r, Flag ship did not pursue its claims ag ainst the City

. I nstead, Flag ship filed suit in Travis County district court on Fe bruary 2 7 , 2 0 0 9, seeking reve rsal of TCEQ’s final order that it lacke d jurisdiction. See Tex. Gov’t Code Ann. § 2001.176(a) , (b) (West 2008). Appellants filed pleas to the jurisdiction. On J anuar y 20, 2010, the district court denied appellants’ pl ea s t o the jurisdiction. Appellants fi l ed this interlocutory appea l. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a) (8) ( West 2008).

Anal ysis A plea to the jurisdiction challeng es the trial court’s authority to deter mine the subject matter of a specific cause of action. See Bland Indep. Sch. Dist. v. Blue , 34 S.W .3d 547, 554 (Tex. 2000). Whether a court has subject-matter jurisdiction and whether a plaintiff has alleg ed fac ts that aff irmatively dem o nstrate subject-matter jurisdiction are questions of law that we revie w de novo. Texas Dep’ t of Parks & W ildlif e v. Miranda , 133 S.W .3d 217, 226 (Tex. 2004)

. When a plea to the jurisdiction cha lleng es the plaintiff’ s pleading s as to a cause of action, we deter mine if the plaintiff has alleg ed fac ts that aff irmatively demonstrate the court’s jurisdiction to hear the cause . Id. I f the pleading s aff

irmatively neg ate t h e ex i s t en ce of jurisdiction, then the plea should be
g rante d. See id. at 227.

Gover nme n ta l immunit y from suit deprive s a trial court of subject-matter jurisdiction for lawsuits in which the State or cer tain g overnme ntal units have been sued , unless the State

4consents to suit. See id. at 224. Flag ship relies on section 2001.171 of the APA for waiver of

immunit y . See Texas Dep’ t of Protective & Regulatory Servs. v. Mega Child Care, Inc. , 145 S.W .3d 170, 1 9 8 (T ex . 2004) (conc luding that section 2001.171 provides limit ed waiver of sovere ign i m munity ). Section 2001.171 provides that a person “who is ag g rieve d by a final decis i o n i n a contested case ” is e ntitled to judicial revie w. See Tex. Gov’ t Code Ann. § 2001.171 (West 2008)

.

Appellants contend that Flag ship is not “ag g rieve d” beca use it obtained from TCEQ the very relief it reque sted. We ag ree . The primary relief Flag ship soug ht w as a ruling that TCEQ

was without jurisdiction, and this is prec isely the relief Flag ship rec eived. A party is not ag g rieve d for pur poses of APA sec tion 2001.171 by a fina l order tha t provides the re sult that party soug ht. 1 Flag s h i p co n t en ds that it is ag g rieve d by TCEQ’s final order beca use there is now

no forum for its dispute ag ainst the City

. Two courts of appea ls declined to hear the dispute based

on their conclusion that TCEQ had exclusive appellate jurisdiction, and TCEQ deter mined that it did
not have appellate jurisdiction. H o w e v e r, befor e eac h tribunal, Flag ship took the position that TCEQ did not have jurisdiction. There fore , to the ex tent that Flag ship is agg rieve d, it is the result of t he decisio n s b y the courts of appea ls, not the final order by TCEQ. Section 2001.171 of the APA

re q u i re s not that the person mere ly be ag g rieve d, but that the person be ag g rieve d by the final dec ision in t he conte sted ca se. See id.

This case is simil ar to GTE Southwest Inc. v. Public Utility Commission , 37 S.W .3d 546 (Tex. App.—Austin 2001, no pet.). I n that case , the plaintiff, GTE, had soug ht dismiss al by the

Flag ship arg ues it should not be prejudice d by the fac t that it “ra ised the issue” of 1 jurisdiction when TCEQ would have raised the issue even if Flag ship had not. Howeve r, Flag ship did more than mer ely

raise the issue. Flag ship requeste d the ver y result that TCEQ re ache d. 5state ag ency of an application made by another party , and the ag ency dismiss ed the application, but

on a separ ate basis than that reque sted by GTE. See 37 S.W .3d at 547-48. GTE sough t j u d i cial revie w so as to challeng e two conclusions of law in the ag ency ’s final order

. See id. at 548-49. This Court held that GTE was not “ag g rieve d” as that term is used in APA section 2001.171 beca use, althoug h the ag ency issued conclusions of law that wer e contra ry to GTE’s interests, GTE obtained the relief it reque sted in the final order itself and did not challeng e that order

. See id. at 549. Her e,

as in GTE Southwest , Flag ship rec eived the final order that it reque sted. There fore , as in GTE Southwest , Flag ship is not agg rieve d as that term is used in APA sec tion 2001.171.

Be cause Flag ship rec eived the relief it reque sted, it is not ag g rieve d by TCEQ’s final decision. Consequently , the district court lacks jurisdiction to enter tain Flag ship’s petition for judicial revie w of the administr a ti v e d ecision. See C.O.N.T.R.O.L

. v. Sentry Envtl., L.P. , 916 S.W .2d 677, 678-79 (Tex. App.—Austin 1996, writ denied)

. We reve rse the district court’s den i al of appellants’ pleas to the jurisdiction a n d d is mi s s F la g s hip’s suit for lack of subject-matter jurisdiction.

__________________________________________ G. Alan Waldrop, Just ice
Be fore J ustices Patterson, Waldrop and H enson Reverse d and Dismissed Filed: Aug ust 27, 2010

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